Incident: The company released its 2024 semi-annual performance forecast. 24H1's net profit attributable to shareholders of listed companies was 3.00 to 0.335 billion yuan, an increase of 139.72% to 167.69% year-on-year; net profit after deducting non-recurring profit and loss was 2.86 to 0.321 billion yuan, +144.08% to 173.95% year-on-year. Our review is as follows:

The 24Q2 performance forecast shows a high year-on-year increase and a slight month-on-month decline. The overall performance is in line with expectations. The company released a semi-annual performance forecast. It is estimated that 24H1's net profit attributable to shareholders of listed companies will be 3.00 to 0.335 billion yuan, an increase of 139.72% to 167.69% year-on-year; net profit not attributable to mother will be 2.86 to 0.321 billion yuan, or +144.08% to 173.95% year-on-year. Among them, the impact of 24H1 non-recurring profit and loss on net profit is about 14 million yuan. Looking at a single quarter, 24Q2's net profit attributable to shareholders of listed companies was 1.38 to 0.173 billion yuan, +77% to +122% year over month, and -15% to +7% month-on-month; net profit after deducting non-return to mother was 1.35 to 0.17 billion yuan, +82% to 129% year over year, and -10% to +13% month over month.

Q2 net profit increased sharply year over year, mainly due to the strong performance of automobiles and consumer electronics. 1) The customer structure of automotive connector products continues to be optimized, and revenue such as core customer inquiries and ideals maintained rapid year-on-year growth; with the recovery of terminal demand for consumer electronics industry products, revenue increased significantly year-on-year. 2) The scale effect brought about by the expansion of revenue and the advantages of platform-based product precision manufacturing processes are gradually showing. At the same time, the company's operating efficiency has improved and cost control capabilities have been strengthened, driving a year-on-year improvement in the gross margin of the core business.

We are optimistic about annual performance growth, and there is room for long-term growth in the intelligent automotive business. The company has a complete range of automotive connector products, successfully introduced in leading customers such as Qunjie, Geely, Great Wall, BYD, and Changan. Benefiting from factors such as the accelerated penetration of automotive intelligence, the terminal price war continues to drive domestic replacement of automotive connector products, and outstanding sales of the company's core customers. 24 The company's automotive business is expected to achieve high performance growth throughout the year, while breaking through overseas core customers is expected to open up more room for growth in the future; in addition, demand from downstream core customers remains high. Implementation contributes to performance, and is optimistic about the company's annual performance and long-term growth space.

Maintain a “Highly Recommended” investment rating. Benefiting from the accelerated penetration of automotive intelligence, domestic replacement of automotive connector products driven by reduced terminal prices, and outstanding sales volume for core customers, the company's automotive business is expected to continue to grow; in addition, the utilization rate of traditional businesses in the consumer electronics sector has increased, and the BTB connector, e-cigarette and other businesses are progressing smoothly. The company's performance is expected to grow rapidly throughout 2024. We expect revenue for 2024-2026 to be 4.61/6.361/8.629 billion yuan, net profit to mother 0.701/0.941/1.227 billion yuan, corresponding EPS 1.66/2.23/2.90 yuan, corresponding PE 21.9/16.3/12.5 times, maintaining a “highly recommended” rating.

Risk warning: Demand recovery falls short of expectations, technological progress falls short of expectations, market competition intensifies, and the risk of price increases for upstream raw materials.